Ballard Power Systems Inc.'s (TSE:BLDP): Ballard Power Systems Inc. engages in the design, development, manufacture, sale, and service of proton exchange membrane fuel cell products worldwide. The company’s loss has recently broadened since it announced a -US$27.3m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$40.3m, moving it further away from breakeven. The most pressing concern for investors is BLDP’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BLDP, its year of breakeven and its implied growth rate.
Consensus from the 5 Electrical analysts is BLDP is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$13m in 2022. Therefore, BLDP is expected to breakeven roughly 3 years from now. What rate will BLDP have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 59%, which is extremely buoyant. If this rate turns out to be too aggressive, BLDP may become profitable much later than analysts predict.
Underlying developments driving BLDP’s growth isn’t the focus of this broad overview, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. BLDP currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. BLDP currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
This article is not intended to be a comprehensive analysis on BLDP, so if you are interested in understanding the company at a deeper level, take a look at BLDP’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:
- Valuation: What is BLDP worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether BLDP is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Ballard Power Systems’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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